What Are the Costs for Medicare Advantage Plans?

Determining the costs for your Medicare Advantage plan can be a little confusing. There are several ways you pay out-of-pocket for your coverage, which may include a monthly premium, a deductible, and a copay or coinsurance cost.

Fact Checked
Published: 11/12/2020
Contributing Expert: Ron Elledge
Reviewed by: Caren Lampitoc

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Ron Elledge
Medicare Consultant and Author
Ron Elledge
Medicare Consultant and Author

Ron Elledge is a seasoned Medicare consultant and author of “Medicare Made Easy.” As a Medicare expert, he regularly consults beneficiaries on Medicare rules, regulations, and strategies.

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Caren Lampitoc
Medicare Consultant
Caren Lampitoc
Medicare Consultant

Caren Lampitoc is an educator and Medicare consultant for Medicare Risk Adjustments and has over 25 years of experience working in the field of Medicine as a surgical coder, educator and consultant.

Since Medicare Advantage plans differ from region to region and offer a variety of benefits, there’s no one cost that is standard. Your payments may be different from what your neighbor pays. You’ll want to look at your plan’s documents or question a Medicare advisor at the company that administers your plans so that you can get a full picture of what you’re paying. Because the task of reviewing and choosing the best Medicare Advantage plan can be a daunting task. We suggest that you contact an insurance broker who specializes in Medicare Advantage Plans. Choose a broker or agent with at least three to five years experience and one who represents multiple plans in your area, this way they can represent you and not a single insurance company. Most brokers/agents do not charge a fee for this service as they are paid by the insurance company if you choose to enroll through them, however, be sure to ask before making an appointment.

The Costs for Medicare Advantage Plans

Medicare Advantage plans, also called Medicare Part C, are offered by private insurers working in conjunction with the U.S. Centers for Medicare and Medicaid Services. They are required to offer at least the same coverage as Original Medicare, which consists of Part A (hospital and skilled nursing care, hospice, and home health care) and Part B (many outpatient services, as well as ambulance, clinical research, and mental health costs). You may also purchase optional Part D, prescription drug coverage, separate from  your Original Medicare plan.

With Medicare Advantage, you are covered for Part A and B, and possibly for Part D depending on your plan. But there are usually ways you can further customize the coverage to fit your particular needs. For example, your plan may include vision or dental care, hearing and hearing aid coverage, or Silver Sneaker coverage at your local gym.

Costs of Medicare Advantage plans vary depending partly on what coverage options you choose. In some cases, you may find that Medicare Advantage offers you more services and coverage for less money than Original Medicare. A good first stop when you are determining the best plan for you is the government’s Medicare site, which allows you to compare the different plans that are available in your region.

How Much Does a Medicare Advantage Plan Cost?

Here is where it gets a little tricky. With Medicare Advantage, you are still going to receive Part A coverage, for which there is no premium if you have worked at least ten years and paid Medicare taxes. You will, however, have a premium for Part B, but depending on your plan, your administrator may pick up all or part of that cost, effectively meaning that you don’t have a premium for Part B coverage. Some people may also qualify for Medicaid, which reimburses the entire Part B premium based on income.

But that doesn’t mean you won’t have a monthly payment — there may still be a Part C payment for your Medicare Advantage plan.

Medicare Advantage Plan Premiums

According to the Kaiser Family Foundation, a non-profit organization that focuses on health issues in the U.S., 60% of Medicare Advantage enrollees pay only their Part B premium each month. Another 17% pay $20-49 a month in addition to Part B, while 12% pay $50-99 monthly. Only 6% pay more than that, and the average is $25/month. This includes plans with Part D drug coverage.

Other Costs to Consider

Knowing what your monthly premium is going to be is important when you’re comparing plans, but it’s only part of the story. There may be other costs involved in your Medicare Advantage plan. This includes copays or coinsurance charges.

A copayment is simply the amount you pay when you visit a doctor, pick up your medications, or are involved in any other health care transaction. With your drugs, there may be different levels of pricing, with generic drugs having one copay, and more expensive medications costing more.

Coinsurance is similar, but here you pay a percentage of the fees, rather than a set amount.

There’s one more term you should be aware of, and that’s your deductible. A deductible is the amount that you have to pay before any Medicare payments kick in. Your Medicare Advantage documents should show you your annual deductible, if there is one.

There is a silver lining, though: Unlike Original Medicare, Medicare Advantage plans are required to have an annual out-of-pocket maximum. Once you’ve paid that maximum amount, you should have 100% coverage for your health care costs for the rest of the year.

How Do I Compare Medicare Advantage Plan Costs?

To compare Medicare Advantage plan costs, it helps to look at the benefits you’re getting with each plan. Take note of whether your plan includes drug coverage or not, since that can be a considerable expense if you are on a maintenance schedule with any drugs to manage illness. Also look at whether your plan covers vision, dental, or any other similar health needs. If it does, you may save money with the plan even if the premiums are higher.

You’ll want to consider those monthly premiums as well as your copayments or coinsurance for each doctor visit or prescription. Then consider your deductible, which can impact the total you are paying each year for medical costs.

So, for example, let’s say a plan has no monthly premium but the drug copay is $20. Another plan has a monthly premium of $40, but a $5 drug copay. If you are taking three medications that need to be refilled every month, you’d pay $60 with the first plan, and $15 with the second for your medications. Adding in the $40 premium for the second gives you $55. So you’re still paying less per month with the second plan than the first, even with the higher premium.

It may also help to look at your annual out-of-pocket maximum, which includes all copays and coinsurance but not the premiums. Again, if you have several drugs to take regularly, see your doctor frequently, or have any surgeries, a low annual deductible will be helpful once you’ve reached the maximum out-of-pocket expenses.

It may take a little work to determine all the pros and cons of each plan, so that you can effectively compare the benefits of a variety of different options, but it’s worth taking the time to do so. Your cost savings and breadth of care options may be greatly enhanced by choosing the right plan for you.

Can I Get Payment Assistance for Medicare Advantage?

If you need help paying for your Medicare Advantage plan, you’ll want to look at a Medicare Savings Program. These plans are administered by each state in the U.S. There are four different types of plan, and you may qualify if you have low monthly income and/or are a working disabled person under the age of 65. These plans generally pay for Medicare Part A and B premiums, and may help with deductibles, coinsurance, and copayments.

The four plan types are:

  • Qualified Medicare Beneficiary Program, if your individual income is $1,084 or less per month and you have less than $7,860 in resources (resources include money in checking or savings account, stocks, and bonds)..
  • Specified Low-Income Medicare Beneficiary Program, if your individual income is $1,296 or less per month and you have less than $7,860 in resources.
  • Qualifying Individual Program, if your individual income is $1,456 or less per month and you have less than $7,860 in resources.
  • Qualified Disabled and Working Individuals Program, if you are a working disabled person under 65 who lost premium-free Part A when you went back to work, and meet income and resource limits set by your state.

Medicare suggests that you consider applying for one of these programs even if your income and resources are higher than the indicated amounts. If you are married, limits may be higher. To find out more about the program that is in place in your state, contact your state’s Medicaid Program to see if you qualify.